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Margin Erosion AI for eCommerce
p/margin-erosion-ai-for-ecommerceIncrease eCommerce profit margins with AI
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Zed M

Margin Erosion AI for eCommerce - Increase eCommerce profit margins with AI

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eCommerce merchants lose 10-30% margin due to excessive and frequent discounting. Uncovering the drivers behind margin erosion is critical to unlocking growth and profitability and that's where our margin erosion AI shines.

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Zed M
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Giveaways, discounts, flash sales are used heavily by eCommerce merchants because they work: they drive sales. But - and this is a huge but - they are often counterproductive - offering high discount levels has an immediate impact on profit margins (known as promotional margin erosion) ... anywhere from 10-30% of margin can be lost this way. It can also dilute the brand value: driving customers to only order when a discount code is available or promo is being run. That sucks. When you delve further, you find that merchants often don't target promotions or offers to customers - giving away the same 30% off whether you're a valued repeat customer or a first time purchaser. This seems antiquated in 2024, so we built a tool to counter the 'you don't improve what you don't measure': introducing margin erosion AI by connectedFlow. It uncovers patterns in discount/promotional usage across customer segments, accurately quantifies the margin erosion rate and gives merchants a really simple tool to use AI to model how much extra margin they could make with targeted promotions. It directly integrates with Shopify, it's completely free to use and is being used by brands across health and wellness, food and beverages, fashion and more. On average we identify over 20% of margin erosion that we can help merchants add to their bottom line. It's the ideal way to start 2024 with a profit increasing bang!